Cracking Open the New York Attorney General's Damning Report on Ticketing: Bots, Shady Brokers, Huge Fees

Katy Perry performs “Part of Me” as part of her Prismatic World Tour at Brooklyn’s Barclays Center on July 24, 2014.

While most of the primary points made in the New York Attorney General's report on ticketing and the secondary market should be news to no one in the industry or even the average informed fan -- Bots are bad! Tickets are held back! Brokers mark up ticket prices! Ticket fees suck! -- there are some interesting things buried in the 44-page report, mostly in the form of specific tactics employed by primary and secondary sellers.

Also interesting are the recommendations made by the AG, Eric Schneiderman, including potential legislative remedies, but it should be noted that the report at this point has no real teeth.

Titled "Obstructed View: What's Blocking New Yorkers from Getting Tickets," the report focuses primarily on the New York City marketplace, which most would agree is hardly representative of the U.S. at large. Even so, New York is an appropriate microcosm for what is going on in the industry at large today in and around ticketing.

It seems one of the primary objectives here was to shine a light on just how few tickets are available at public onsales, which has been well-chronicled in the past. Schneiderman found that, on average, only about 46 percent of tickets are reserved for the public. As has been reported in Billboard (without corresponding percentages), the remaining inventory in New York is divided between 16 percent for industry holds (described as "artists, agents, venues, promoters, marketing departments, record labels, and sponsors") and 38 percent for pre-sales. What the report fails to make clear, though, is the pre-sale purchasers in fact are the general public to a large degree, even if they're made up of fan club members or holders of a specific credit card that has made a deal with the artist, venue or promoter. The report correctly points out that "brokers… often begin harvesting tickets at these presale events," though efforts have been steeped up to stop them at this stage of the game (example: Songkick weeded out thousands of bogus purchasers during Adele's presale). Though presales do get infiltrated, a broker purchase is still a purchase, and fans are ultimately the end-user -- if at a much higher price.

The problems here are twofold: first, a large swath of consumers are priced out of the market and, secondly, the markups and profits don't go back to the actual producers of the show. The latter here is a long-held beef the primary market has with resellers. It is true that promoters, ticketing companies, artist teams, and venues have been less than transparent in pointing out just how few tickets are available at the "general public" on-sale. The AG's report states that just over 1,600 tickets (12 percent of all tickets) were available for the public on-sale for a July, 2014 Katy Perry concert at Brooklyn's Barclays Center, and fewer than 2,000 (15 percent) were up for grabs for two Justin Bieber concerts at Madison Square Garden in November of 2012.

Much of the most informative information is around botting, with the report stating that, while no current federal law specifically prohibits the use of ticket bots, the "Better On-line Ticket Sales Act of 2014" or BOTS Act, would prohibit the sale or use of ticket bots, with criminal penalties attached. The industry is well aware that bots are hammering the system, but the report provides actual tactics and numbers. One bot-assisted broker snagged over 1,000 tickets to U2's Innocence + Experience run at the Garden within the first minute of onsale. While 1,000 tickets in a minute is certainly significant, it is worth noting that U2 sold 150,000 tickets in New York from those eight sellouts at the Garden, which grossed nearly $20 million, according to Billboard Boxscore. Similarly, the report found that 15,000 tickets at 20 different venues on the tour were purchased by two bots on Dec. 8; that effectively amounts to another show on U2's tour in which the band and producers did not participate in profits.

The dollars involved here are eye-catching. A "broker profile" reveals that a "one-man bot Broker" churned $1.4 million from New York events in 2014 by scamming Ticketmaster's system, using 1,000 credit cards to "maximize yield" and skirt ticket limits. This enterprising youth, while still in college, paid overseas programmers for "sophisticated ticket-buying bots designed to mimic the Ticketmaster iPhone app and defeat its anti-bot defenses." According to the report, the "harvest" ended up on StubHub, Vivid Seats, and the broker's own site, and while the broker frequently targeted New York events, it was not licensed in New York.

In another example, one broker used 149 different American Express cards to make more than 38,000 purchases totaling over $12 million from 2013-2015, "while other brokers racked up similarly shocking volumes of purchases, sometimes using just a handful of credit cards."

And even if it's no secret that "brokers profit by selling tickets at a substantial markup over face value," as the report asserts, the Schneiderman found that six brokershe studied marked up their tickets an estimated 49 percent on average, ranging from 15 percent to 118 percent.

The report did not spare the primary market either, slamming ticketing fees, finding that the average surcharge in New York is 21 percent of the face value of a ticket, or $8 on average.

Among the report's recommendations were a cap on markups, and that ticket resale platforms require resellers to provide their ticket reseller license number as a condition of using the platform. The report also urges secondary platforms to disclose the face value of tickets for sale, which is already required of resellers by New York State law.

On the primary sides of the equation, the AG recommends that the industry "must publicly disclose the allocation of tickets through holds, pre-sale events, and public on-sales" and "effectively distribute information to the public." The AG also urges ticket vendors to "address the bot epidemic."

Don Vaccaro, CEO of leading secondary market ticket aggregator TicketNetwork, tells Billboard that his firm "applauds the efforts of Attorney General Schneiderman for taking a stand against venues and teams that prevent fans from freely selling their tickets, place price floors on tickets, and refuse to disclose what tickets actually remain on sale for the public to purchase." Vaccoro goes on to say that, "like TicketNetwork, the Attorney General supports fair pricing and keeping general public access to games affordable, and we will happily continue to work with his office to ensure customers are treated fairly."

Some of the suggestions included preemptively enforcing ticket limits, analyzing purchase data to identify ongoing Bot operations, and investigating resellers regularly offering large numbers of tickets to popular shows, among others. The report points out that "in many cases, industry players do not have an incentive to reform," and suggests the legislature should mandate these reforms.

The AG also says that the New York ban on non-transferrable paperless tickets should be "reconsidered and repealed."

Several live industry execs declined to comment on the record for this story.

In a statement provided to Billboard, reseller StubHub says it "believes that a fair, secure and open ticket marketplace supports fans. Consumers should be protected from unfair and deceptive practices that make it harder for fans to buy and use event tickets in an open market. We are strongly committed to partnering with industry, public policy and other leaders to achieve this goal."